Which of the Following Statements Is CORRECT

question 35

Multiple Choice

Which of the following statements is CORRECT?

• A)10-year, zero coupon bonds have higher reinvestment rate risk than 10-year, 10% coupon bonds.
• B)A 10-year, 10% coupon bond has less reinvestment rate risk than a 10-year, 5% coupon bond (assuming all else equal).
• C)The total return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the end of the year.
• D)The price of a 20-year, 10% bond is less sensitive to changes in interest rates than the price of a 5-year, 10% bond.
• E)A $1,000 bond with $100 annual interest payments that has 5 years to maturity and is not expected to default would sell at a discount if interest rates were below 9% and at a premium if interest rates were greater than 11%.

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Definitions:

Liberation

The act or process of freeing someone or something from another's control or overcoming a limiting condition or situation.

Ancestors

Predecessors from which one is descended, generally referring to earlier generations of a person's family lineage, who may influence current cultural, social, or biological aspects of the family.

Distinctive Role

Distinctive Role refers to a unique function or position that differentiates one entity or concept from another within a particular context or system.

Human Sacrifice

The act of killing one or more humans as part of a ritual, intended to appease or please deities, spirits, or the deceased, found in various cultures through history.